Minnesota Pet-Breeders v. Schell & Kampeter

• Decision Date: 06 July 1993
• Docket Number: No. CV 3-90-277.,CV 3-90-277.
• Citation: 843 F. Supp. 506
• Parties: MINNESOTA PET-BREEDERS, INC., Plaintiff, v. SCHELL & KAMPETER, INC., d/b/a Diamond Feeds, Defendant.
• Court: U.S. District Court — District of Minnesota

843 F. Supp. 506

MINNESOTA PET-BREEDERS, INC., Plaintiff, v. SCHELL & KAMPETER, INC., d/b/a Diamond Feeds, Defendant.

No. CV 3-90-277.

United States District Court, D. Minnesota, Third Division.

July 6, 1993.

COPYRIGHT MATERIAL OMITTED

Eric O. Haugen, Haugen & Nikolai, Charles A. Cox, Cox & Goudy, Minneapolis, MN, for plaintiff.

Lionel L. Lucchesi and Michael Kovac, Polster, Lieder, Woodruff & Lucchesi, St. Louis, MO and Thomas J. Stueber and David R. Fairbairn, Kinney & Lange, Minneapolis, MN, for defendant.

Memorandum Opinion and Order

KYLE, District Judge.

Introduction

Before the Court is defendant Schell & Kampeter, Inc.'s (d/b/a and hereinafter "Diamond Feeds") Motion for Partial Summary Judgment with respect to the relief sought by plaintiff Minnesota Pet-Breeders, Inc. ("Pet-Breeders"). Pet-Breeders has asserted various trademark infringement and unfair competition claims against Diamond Feeds in connection with the production and sale of dog food.

Background

This trademark infringement and unfair competition action has come before the Court on prior occasions and the general facts are contained in this Court's Memorandum Opinion and Order, filed September 25, 1992. This section will set forth only those additional facts which are relevant to the present motion.

Based on Diamond Feeds' (a) alleged infringement of Pet-Breeder's trademark "PRO-DIET" and (b) attempt to trade off the goodwill associated with "PRO-DIET" by engaging in a slow transition from the use of "ProDiet"¹ to "Professional" and "Professional Diet," the Amended Complaint asserts four causes of action: federal trademark infringement (Count I); common law unfair competition and infringement (Count II); false designation of origin under federal trademark law (Count III); and violations of the Minnesota Deceptive Trade Practices Act (Count IV). Pet-Breeders claims damage to its business, reputation and goodwill from the loss of sales and profits; it seeks injunctive relief, destruction of Diamond Feeds' trademarked packages, an accounting of profits, monetary damages, treble, punitive and exemplary damages, and attorneys' fees and costs.

During the course of litigation, Pet-Breeders limited the extent of some its requested relief and clarified the nature of its trademark claims. It has limited the request for an accounting of profits and damages to the years 1987, 1988, 1989 and 1990, and has further stated that it "was not making a claim for defendant's use of Professional Diet after 1990 and was not making any claim for `Professional.'" Defendant's Exh. F, letter from attorney Charles A. Cox, December 16, 1992. Pet-Breeders admitted that "there is no question that if Diamond Feeds had used Professional Diet without prior misappropriation of Pro-Diet there would be no basis for a claim." Defendant's Exh. C, Pet-Breeders' Memorandum in Opposition to Defendant's Second Motion for Summary Judgment, p. 13.

Uncontradicted evidence submitted in connection with this motion shows that, although there may have been sales of relatively minor dollar amounts in several other states, Pet-Breeders' primary sales of its "PRO-DIET" products occurred in Minnesota, North Dakota and South Dakota. Defendant's Exh. G, Stanley Crume Depo., pp. 44-45; Defendant's Exh. H., Pet-Breeders' Response to Second Request for Admissions, No. 16, CV 3-92-678. Such evidence also shows that Diamond Feeds sold products marked with "DIAMOND Professional Diet" in Minnesota in 1988, 1989 and 1990, but did not sell its other product lines, "NUTRA-NUGGETS ProDiet" and "NUTRA-NUGGETS Professional Diet," in Minnesota, North Dakota or South Dakota between 1987 and 1990. As Pet-Breeders' claims do not include the use of "DIAMOND Professional Diet" (Defendant's Exh. D, Pet-Breeders' Objections to Defendant's Trial Exhibits), its claims of infringement cover only the use of "NUTRA-NUGGETS Professional" and "NUTRA-NUGGETS Professional Diet," neither of which was used in Pet-Breeders' primary market area.

Position of the Parties

a. Diamond Feeds' motion addresses only the remedies Pet-Breeders seeks.² For the purposes of the motion, it is assumed that Pet-Breeders can prove the elements of its trademark and unfair competition claims; notwithstanding, Diamond Feeds contends that Pet-Breeders is not entitled to the injunctive and monetary relief it seeks. Diamond Feeds asserts the following: 1) the lack of competition in the same geographic market eliminates the possibility of consumer confusion between two trademarked products, which in turn would preclude an accounting of profits for such infringement; 2) Pet-Breeders has not established that it suffered any lost sales or profits from Diamond Feeds' alleged infringement which, in turn, would preclude an award of monetary damages; 3) Pet-Breeders is not entitled to an injunction because a) Diamond Feeds has voluntarily ceased using the "ProDiet" mark,³ and b) Pet-Breeders has not demonstrated a "likelihood of entry" into Diamond Feeds' trade area; 4) punitive damages are not available under the Lanham Act; 5) Pet-Breeders is not entitled to attorneys' fees on the facts of this case; and 6) monetary damages are not available under the Minnesota Deceptive Trade Practices Act.

b. In response, Pet Breeders asserts the following: 1) its claims of infringement rest not only on the sale of Diamond Feeds' products affixed with the infringing mark, but also on Diamond Feeds' continued advertising and UPC designation of the "PRO-DIET" mark; that there may have been no direct competition in the same geographic market is irrelevant to the issue of infringement; 2) it is entitled to an accounting of profits for Diamond Feed's intentional and bad faith infringement, regardless of whether it suffered actual losses; 3) injunctive relief is warranted because Diamond Feeds has not ceased all infringing uses and this is a case of "reverse confusion" which hinders its ability to expand its trade area; and 4) it is entitled to attorneys' fees under both the Lanham Act and the Minnesota Deceptive Trade Practices Act because this is an "exceptional" case of knowing and willful trademark infringement. Pet-Breeders concedes that punitive damages are not available under the Lanham Act, but asserts that they are available under Minnesota law where a defendant has acted with deliberate disregard of, or willful indifference to, the rights of the plaintiff.

Discussion

I. SUMMARY JUDGMENT STANDARD

The moving party is not entitled to summary judgment unless the movant can show that no genuine issue exists as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a summary judgment motion, a court must determine whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The role of the court is not to weigh the evidence but instead to determine whether, as a matter of law, a genuine issue of material fact exists. Agristor Leasing v. Farrow, 826 F.2d 732, 733 (8th Cir.1987). "In making this determination, the court is required to view the evidence in the light most favorable to the non-moving party and to give that party the benefit of all reasonable inferences to be drawn from the facts." Id. at 734.

"To withstand a motion for summary judgment, a party need not prove in its favor an issue of material fact; all that is required is sufficient evidence supporting a material factual dispute that would require resolution by a trier of fact." Unigroup v. O'Rourke Storage & Transfer, 980 F.2d 1217, 1220 (8th Cir.1992) (citations omitted). The non-moving party may not merely rest upon the allegations or denials of the party's pleading, but must set forth specific facts, by affidavits or otherwise, showing that there is a genuine issue of material fact for trial. Lomar Wholesale Grocery, Inc. v. Dieter's Gourmet Foods, Inc., 824 F.2d 582, 585 (8th Cir.1987), cert. denied, 484 U.S. 1010, 108 S.Ct. 707, 98 L.Ed.2d 658 (1988). Summary judgment must be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).

II. REMEDIES FOR TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION

Under the Lanham Act, a prevailing plaintiff is entitled,

subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute just compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party.

15 U.S.C. § 1117(a). "The district court is given broad discretion to award the monetary relief necessary to serve the interests of justice, provided it does not award such relief as a penalty." Metric & Multistandard Components Corp. v. Metric's, Inc., 635 F.2d 710, 715 (8th Cir.1980). See also Otis Clapp & Son, Inc. v....